Introductory speech by the General Secretary of the Central Committee of AKEL, Stefanos Stefanou,  at the Economic Forum organised by AKEL

 

Tuesday 31 October 2023, Conference Centre, Nicosia

I welcome you all to the Economic Forum organised by AKEL. Thank you for doing us the honor of being here today.

The economy is very high on AKEL’s political agenda and daily activity. And this is perfectly normal, given that without a stable and strong economy, no state can survive in today’s world.

But the key question that arises and is at the core of the reflection of today’s conference is: what kind of economy? With what specific characteristics, targets and orientation?

Today’s Forum on the economy seeks to open up the dialogue surrounding real, reforms, even radical solutions to the socio-economic problems we face. But to consider alternative solutions that are breakthroughs, we are called upon to understand the multiple crises we face globally and, above all, to understand the interconnectedness of the economic crises with the ecological crisis that threatens our very survival on the planet.

The financial crises of previous decades, which were caused by an inadequate supervisory framework and a developmental model based on unregulated lending, have had repercussions that are still being felt in most countries.

The growth that followed, based on extremely low interest rates, is now taking a severe hit with many economies recording an alarming slowdown.

As the well-known French economist Thomas Piketty has shown in his very important work, in recent decades inequalities have increased in most countries around the world. Above all, the inequality between the top 1% of the world’s population and everyone else has increased. Many analysts also expect global poverty to increase.

Inflationary pressures, high interest rates combined with the consequences of war conflicts, such as the one in Ukraine and now in the Middle East, are dismantling social cohesion and undermining people’s trust in institutions such as the political system, governments and politicians. Growing mistrust and, above all, dissatisfaction are leading to mass demonstrations such as those we have seen recently in France, but also leading to the upsurge in populism, the strengthening of the far-right and hate rhetoric. It thus proves that the economy cannot be perceived separately from the functioning of democracy.

It is therefore time to rethink the way we assess the economy. The decisive factors of economic growth – consumption, investment, government spending and the trade balance – must be considered alongside the impact of growth on rising inequality or negative ecological impacts. The goal should be to achieve economic growth that is socially equitable and compatible with environmental objectives.

Looking to the future, AKEL focuses on an economy that should be based on two pillars: a healthy entrepreneurship that contributes to dynamic growth and social reflexes that lead to citizen’s prosperity.

We understand that for many reasons, which are not the subject of debate right now, a section of society, and primarily part of the business community that you represent here today, is skeptical about our understanding of the economy and ability to handle it. This impression does us an injustice. Not only do we know how the economy works and how market forces work, but, as you will see today, we are formulating our own proposals accordingly. We believe however as the recent public health pandemic proved to even the most skeptical, that the notorious “invisible hand of the markets” did not work and that the state has the capacity to play a leading role in handling and responding to crises.

It is therefore our conviction that the economy is based equally on the contribution of working people and businesses, the state and investors, with each party entitled to a fair share of the benefits.

With initiatives, like today’s, we are seeking to formulate a comprehensive proposal that not only does not counter, but boosts entrepreneurship, whilst at the same time giving the economy a social dimension, with practical proposals to confront phenomena such as, for example, price increases/expensiveness.

The development of the Cyprus economy is currently being held back:

First, by the bad image our country has abroad which is the result of the scandal (or rather, scandals because there are numerous) with the ‘golden passports’ scheme that exposed the Republic of Cyprus internationally. This image has been accompanied by the huge increase in interwoven interests, entanglement and corruption that went on over the past years involving the executive power, the former President of the Republic himself and his circle.

I am sure that all of you, protagonists of the economy, who have relations with investors and foreign businessmen frequently perceive the consequences of this image. The need to reverse the impressions that limit investment and render the country an unreliable economic partner is indeed urgent.

The second fact that is holding back the Cyprus economy relates to a domestic reality. The Cyprus economy has been prone in recent years to anarchic growth, “get-rich-quick” policies and circumstantial profit, generating a big increase in income and social inequalities. Price increases, rising rents in urban areas, the burden of private debt and stagnating wages and incomes – particularly in the private sector – have led most of society to experience the current situation with pessimism and to feel economically insecure about the future. I am sure that you, more than anyone else, know that bad psychology is the worst thing for the economy.

Ladies and gentlemen,

We know that developments in the economy are not easy. We understand the economic difficulties faced by a large section of the population and the ever-increasing challenges the country’s productive forces are facing. That is precisely why we believe that our developmental vision for the future should be summarized in two key components:

α) Economic growth by strengthening entrepreneurship.

1. b) The enhancement of society’s income.

To achieve these objectives, AKEL proposes the following:

• Reshaping our country’s developmental model to ensure a growth that is substantive and characterised by sustainability.
• Tackling the growing income and social inequalities that can be achieved by sharing the economic burden according to one’s income and financial standing and by ensuring quality jobs with rights, dignified wages and pensions.
• Supporting entrepreneurship and, first and foremost, small and medium-sized enterprises, which constitute the backbone of the Cyprus economy.
• Tax reform that should serve both the objective of a more just distribution of economic burdens, as well as the goal of supporting entrepreneurship through the provision of incentives.
• Protecting the environment from anarchic development.
• Parity and justice at all levels of economic activity, both in the private and public sectors.

These are the axes on which we base our action and on which we seek to forge the alliances that our country’s economy needs.

In our understanding the new developmental model must seek to:

First, expand the economy through productive investment.

Investments, both domestic and foreign, must not be temporary but take on a permanent character and should serve broader social and environmental objectives.

Secondly, support society. This is an objective of prime importance, especially in our times when inflation and expensiveness are on the rise.

Thirdly, support a strong welfare state that provides basic goods and services to citizens.

Fourthly, ensure that the State has sufficient resources so that there is stability in public finances and, at the same time, the State should support society and act as an agency of growth. The tax reform that is urgently needed can contribute towards fulfilling this objective.

Fifthly, develop a model State that cooperates with the private sector for the benefit of the country and society. Far from the logic and policies of a “lesser State” which leaves citizens unprotected in difficulty times. Cyprus is a small semi-occupied country, isolated in the Eastern Mediterranean, and for that reason there cannot but be a rationalised presence of the state in the Cyprus economy’s strategic sectors. The critical energy sector is a prime example of the role of the state. Much needs to be done in the energy sector in the short term, since that has not been done over the past ten years.

Sixth, ensure dignified wages and working conditions. Ensuring basic labour rights, restoring the purchasing power of wages, giving employers incentives to move in this direction.

Finally, there is the financial system, which is crucial for the existence of a strong and healthy economy. We need a credible financial system that works for the benefit, not to the detriment, of the economy and society. A financial system whose relationship with businesses and society is not based on blackmail and the exploitation of its dominant position but on cooperation, ending abuses and illegal practices.

I have left the crucial issue of the solution of the Cyprus problem for last. The ongoing pending issue is jeopardising the future not only of the economy, but also of the country as a whole. The non-solution of the Cyprus problem does not only perpetuate conditions of insecurity, but at the same time, limits or even deprives the economy of opportunities for growth.

Just think if the Cyprus problem were resolved, how much easier it would be for us to achieve energy connectivity for our country, instead of settling for difficult or even incompatible – from an economic and commercial point of view – plans.

Think of where the energy programme of the Republic of Cyprus might have been had the occupying power not been in the way, threatening and preventing its development.

Think of what additional investments could be made for growth in our country.

Ladies and Gentlemen,

It is against this background that we are outlining our subsequent steps. We do not want to see the economy being led down an erroneous path. We do not want corruption to be the main pillar of the generation of wealth. Nor can we accept that future generations will continue to live worse than previous generations.

We have an obligation to offer hope again. We need to redefine concepts such as growth, innovation, productivity, social protection and dignified work in a new economic policy framework. A frank and structured social dialogue is imperative on how to create an economy that is fairer, more inclusive, less exploitative and a more cohesive society.

With an eye to the future, open to reflections and drawing the necessary lessons from the past, AKEL declares that it is ready not only to participate, but also to contribute in a responsible way to the shaping of this new operating model that will restore society’s confidence in the future of the economy and the country.